Tata Power Company's decision may mean additional tariff burden
26 Jun 2009 Chittaranjan Tembhekar, TNN

MUMBAI: Tata Power Company's decision to snap its power supply to Reliance next year is likely to translate into a further increase in electricity
tariff for consumers in suburban Mumbai.

"We will support Reliance Infrastructure Ltd for nearly one year in the interest of Mumbai consumers and this arrangement will continue till March 31, 2010,'' a TPC official announced on Thursday, explaining that a recent Supreme Court judgment had held that RIL had no legal right to insist on getting power supply from TPC's generation facility.

What this means, for over 27 lakh suburban consumers who draw power from RIL, is that the latter's source of relatively cheap power may go in less than a year. RIL will have to buy power from the free market at rates more than thrice the TPC power price. RIL will not bear the additional cost and so consumers will have to pay through their nose if a rapprochement does not happen soon.

The going rate of power in the open market is not less than Rs 9 per unit; it goes up to Rs 14 per unit in summer.

RIL officials said only a government permission to expand its power plant in Dahanu could save consumers in suburban Mumbai; otherwise, Mumbaikars should get ready to live with two-and-a-half hours of load-shedding daily.

Power sector officials said the TPC decision might be intended at expanding its own residential consumer base by installing its own power supply network in suburban Mumbai. TPC officials, however, said the firm did not have any such motive. But they refused to explain what had prompted the TPC move.

TPC earlier used to supply 762 MW of power to RIL but then reduced it to 500 MW by diverting the remainder to BEST. RIL challenged this diversion in court and demanded that the power purchase agreement (PPA) between RIL and TPC have 762 MW as the quantum to be shared. The court, however, ruled in favour of the TPC decision.

TPC now seems to have followed the court ruling. Senior RIL officials said TPC had "verbally agreed'' to sign a PPA for supplying 500 MW to RIL for the next 10 years. TPC denied any such commitment. TPC can now divert this 500 MW to the open market.